FOOD FOR THOUGHT – PART 2:WHY AMAZON, GOOGLE AND FACEBOOK ARE THE TRAVEL SPACE’S BIGGEST THREATS
FORT LAUDERDALE, Fla. — In Shakespeare’s “Hamlet,” Prince Hamlet postulates that, “Something is rotten in the state of Denmark,” but he doesn’t put his finger on it until a play in the royal court revealed who killed his father, the king. There’s similar dramaturgy reeking through the halls of recent hotel industry conferences: Are asset values too high? Is money too cheap? Have we reached the peak of the cycle? And while the actors with the answers (or opinions) usually converge on investment-focused conferences, it’s technology-centric gatherings that could serve them some competing intel.
One such event is the Phocuswright Conference, which brought together startup companies and innovators from throughout the world of travel, including hotels, cruise, airlines, tours and attractions, here to the Diplomat Hotel and Resort. They all tried to answer the question: How do you keep up with the technology that continues to evolve and dog the travel industry?
Disrupting the Disruptors
Innovators such as Duetto and Roomkey came on the scene in the past few years to help hotels recapture the technology edge in areas, such as revenue management and distribution.
Now, a new crop of startups is challenging the disruptors themselves, attempting to take over small niches within these areas. For example, Phocuswright presenter Splitty Travel breaks apart reservations into component stays at different hotel properties, allowing consumers to make a single booking that results in stays in different properties in the same city—all via the same booking, and on the same trip.
For consumers who don’t mind packing and unpacking, this can provide a better price; for hotels, it permits selling off bits of inventory as part of a more complex reservation, rather than holding a room unoccupied.
“Reservation splitting” and other technologies revealed at Phocsuwright promise to provide new levels of flexibility and predictability for hotel revenue managers.
But judging the Phocuswright “shark tank” opening session, Thayer Ventures Managing Partner Chris Hemmeter questioned whether, being “niche” players in an already crowded space, any of them has the potential to grow into sustainable businesses that can achieve solid valuations or can provide services to the industry for decades to come.
Other startup presenters included Waylo, which bills itself as the “first hotel price prediction app”, and Pablow, which is innovating in travel insurance in the vacation rental market. Redeam, a ticketing distribution solution for tourist attractions, won the General Catalyst Award for Travel Innovation at the show.
Fintech Solutions and the Rise of the Global Innovation
A new generation of financial solutions applied to travel also have the potential to open new revenue channels. Uplift, a financing company founded by the technologists who created mega-search, enables travelers to “buy now and pay later,” with monthly installments offered at low rates. This has the potential to help boost conversion rates for travel providers, build customer acquisition and help merchandise specific products to increase total traveler spend.
While Uplift aims to grow first in the airline and cruise verticals, its technology seems ripe to help hoteliers grab ancillary revenue and stay on track via latest in-trip financing technologies.
Uplift won in the “Emerging” category of companies recognized for innovative potential at the conference.
Another company, Connexpay, offers a combined virtual card issuing and merchant acquiring solution to large and mid-size corporations, claiming to result in lower processing fees and lower credit risk.
Conichi, a startup focused on digitizing hotel operations, such as check-in and checkout, was the runner-up in the startup category.
On the Global Stage
The rise of the global traveler, and global innovation was on the mind of Cindy Wang, CEO of Chinese travel agency Ctrip. She delivered a Phocuswright keynote and recounted the incredible growth of the travel sector, and the traveling public, in China over the past decade. She predicted the growth would continue and accelerate.
Along with it, the opportunities for innovating to serve the expanding Chinese base of travelers will continue to rise.
Wang also commented on the importance of package tours for the Chinese traveler, and the need for other innovations to facilitate travel among growing populations that have language barriers when visiting abroad.
This kind of personalization was a main theme at the conference, as hotel companies and others continue to search for the holy grail for making travel booking, stays and service completely personalized experiences.
Duetto Co-Founder and CEO Patrick Bosworth spoke about this at length on one of the conference’s closing panels, hinting at the broad changes in technology that will be required to facilitate and accommodate greater levels of personalization.
What It Means for Hotels
It’s becoming increasingly clear that there are two main conversations shaping the future of the hotel industry. On the one hand, there is the asset conversation, focused on operating and financial trends, the proliferation of new brands, labor issues and other factors impacting the valuations of brands and properties.
These issues never go away, and should be central for industry decision-makers.
But there is also is an increasingly complex conversation about innovation, including the continuing impact of OTAs; the flood of new technologies coming to the market to help hotels do their jobs better; the future of the guest experience on property; and of hotels’ ability to acquire, retain, serve and monetize guests as they have done in the past.
From OTAs and new gatekeepers to micro-innovators in the revenue management space, everyone wants a piece of the hotel revenue pie. Many of them are poised to take it, and some already have.
Edited by K Mosue, TBCSA. By Michael Frenkel is president of MFC PR and marketing partner at Thayer Ventures.